Premiums up for flammable cladding

Cost to rise for older buildings with risky aluminium facades

DUBAI // Insurance premiums for older buildings with combustible cladding are set to rise.

The aluminium cladding with a flammable core has been blamed for fires including the 2015 New Year’s Eve blaze at The Address Downtown Dubai, and one at Tamweel Towers five years ago.

Premiums for buildings that still have it will cost more than newer structures that comply with the recently released UAE Fire and Life safety code.

Insurers would not say by how much the premiums would rise but said the effect was unlikely to be immediate and the increase would not be exorbitant.

“The market for such high-rise buildings with combustible cladding has already hardened since last year,” said Toby Sizeland, of Axa Insurance. “There has been much awareness in the market and a major thrust on fire safety standards and management.

“The market is going to see differential pricing for buildings built to the new code than the older version. This impact is likely to smooth out over time.”

Meanwhile, residents at Tamweel, in Jumeirah Lakes Towers, were yesterday allowed into their flats after five years of waiting and worry.

The full effect of the new code and pricing would take some time to mature, Mr Sizeland said.

“The new code is expected to strengthen the resolve of the UAE for safe living,” he said. “Also, greater accountability has been enforced on the entire ecosystem of the construction industry, including materials suppliers.” Risk management engineers and property surveyors who inspect high-rise buildings before they are accepted by insurers will be key to checking the fire rating of panels and overall fire safety.

If gaps were found, recommendations would be made to implement fire protection systems that could minimise risk and control loss.

The process to apply for insurance ensured there would be clear disclosure of fire risk and building materials used, said Prabhat Singh, senior vice president at Oman Insurance. “Premiums are based on an intricate set of factors such as the level of risk exposure and quality of risk-management programmes, and may be higher for old buildings with flammable cladding,” Mr Singh said.

“But we do have historical lessons that will assist us in capping premiums at a reasonable point, so the market is unlikely to witness exaggerated demands.”

Older buildings with combustible cladding will be insured as long as damage, property loss or costs for interruption to business can be evaluated. “Property owners will now simply need to strengthen their risk-management programmes in terms of fire safety and protection measures,” Mr Singh said.

“This will ensure that they are safeguarded in the event of any unforeseen incidents, and it will minimise their risk and control their losses.”

Reducing the fire risk of cladding, making each sector in the building industry accountable, third-party testing and a mandatory facade maintenance for older buildings to meet new regulations are part of the updated code released last month.

Owners said they worried about higher costs and the long-term future of their property.

“If we’re asked to put in more sprinklers or smoke detectors, that is fine,” said Saraf Khumri, a resident of Jumeirah Lakes Towers. “But replacing cladding or adding fire barriers is more expensive and we are worried this will come up when we renew our insurance.”

‘ Property owners will now simply need to strengthen their risk-management programmes Prabhat Singh senior vice president at Oman Insurance